Bribes and kickbacks vectored to Fontana’s former city manager nearly two generations ago will continue to haunt the city’s residents well into the future, including hundreds or even thousands who have yet to move into the community.
The Fontana City Council on March 10 unanimously adopted a resolution to establish a Mello Roos community facilities district within the long-existent Southridge community in the city’s southwest quadrant. That action was the followed with confirming action by the entirety of the council at its April 14, 2026 and April 28, 2026 meetings. The council’s action, in creating the municipal subdivision labeled it City of Fontana Community Facilities District No. 117 (Southridge), and authorized it to levy a “special tax” within the boundaries of the community facilities district for the purpose of financing certain public facilities and services.
Community services districts, particularly those created under the auspices of the Mello Roos Act and the Marx Roos Act, are areas within a larger city or county subject to “special taxes” in addition to property tax that is normally borne by property and/or homeowners in those jurisdictions. The tax districts established by cities, counties, school districts, or other local agencies to fund public infrastructure and services such as roads, schools, parks, water systems, and fire/police stations.
Historically in California, the cost of providing that infrastructure and both on-site and off-site improvements fell to the landowners and developers of property. Then-assemblymen Assemblyman Henry Mello and Assemblyman Mike Roos sponsored the Marx-Roos and Mello-Roos acts partially as a sop to local officials, whose political campaigns in large measure were funded by real estate and developmental interests and were therefore interest in transferring the financial burden of parks, water systems, and fire/police stations.
constructing the infrastructure needed to accompany development from the developers and the landowners to the eventual buyers of the property – i.e., the houses – those developers built on the land owned by the landowners. This substantially increased the profits of those involved in the development industry.
The documentation relating to the Southridge community facilities district created by city staff and signed off on by the city council at the March 10, April 14 and April 28 meetings transfers the burden of paying for the infrastructure that is to accompany the single family homes being constructed by KB Homes and KB Homes Cal Management Services to the owners of the homes. While initially that will be KB Homes, as the homes sell the purchasers will become responsible for the Mello Roos assessments, which are separate from the property tax levied by the county on the properties.
This double taxation is in large measure a byproduct of the graft that consumed Fontana in the 1980s.
In the early 1980s, the land where Southridge has now long been established was a vast expanse of mostly undeveloped property. Three individuals – brothers Dick and Bill Ashby and Larry Redman, functioning under the corporate veil of Newport Beach-based Ten-Ninety Corporation began to tie up property in the area and approached city officials about developing it predominantly residentially, what was essentially a residential subdivision with a school, a park and some small neighborhood commercial uses.
Much of the dialogue took place between the Ashbys, Redmond and then-City Manager Jack Daze Ratelle. The Ashbys and Redmond, given periodic one-on-one access to the mayor and members of the city council by Ratelle, were able to convince the city’s elected decision-makers that their proposed undertaking would provide the steeltown community, where the Kaiser Steel Mill was on the brink of shutting down, in which three of the distinguishing achievements were that it was the birthplace of the Hells Angels and Devils Diciples motorcycle gangs and the home to Ku Klux Klan Grand Wizard George Pepper, with an infusion of young, upwardly mobile professionals as residents who would change the community for the better. Simultaneously, they made the claim that they could not afford to pay up front for the infrastructure that would be needed to allow the project to proceed.
In mostly private dialogue with Ratelle, an arrangement to have the city issue $65 million in certificates of participation – a type of municipal bond – and take out $55 million loans from the Glaziers’ Union was made, whereupon Ratelle convinced the city council that the proceeds could be used to cover the $120 worth of infrastructure needed to facilitate the completion of the planned 9,100-unit Southridge residential project. The city council signed off on the bond issuance and the loan. This created city debt that had to be serviced through the imposition of assessments on the purchasers of the homes in Southridge. In practical terms, this meant that the city over the course of three decades ending in 2013 made regular payments of $3.12 million per quarter or $12.48 million annually and a total of $374.4 million to the bond holders and the glaziers union.
The Southridge project would not have proceeded had Ratelle not convinced the members of the Fontana City Council that the Ten-Ninety Corporation lacked the financial wherewithal to finance the construction of the infrastructure to support the Southridge project and that the project would not come to fruition unless the city and its taxpayers defrayed the cost of the infrastructure.
Not disclosed at that time was that the Ashby Brothers and Redman were the purchasers of the certificates of participation. It was the proceeds from the sale of those bonds, along with the loans from the Glaziers’ Union, which were utilized to pay to construct the Southridge infrastructure, consisting of roads, curbs, gutters, sidewalks, storm drains, sewers and a school. Over the thirty years the City of Fontana was diverting a portion of the property tax it was receiving and homeowners in Southridge were paying Mello Roos fees in addition to standard property tax to service the debt the city had taken on to build the Southridge infrastructure, the Ashbys and Redman saw a return of $202.8 million on their investment in the certificates of participation – a profit of $137.8 million.
The law firm of Sabo & Deitsch, which in the early 1980s was serving as the City of Fontana’s redevelopment agency counsel, served as the bond counsel on the issuance of the $65 million in certificates of participation and was paid 0.5 percent of the issuance or $325,000 and simultaneously served as the disclosure counsel on the $65 million issuance, for which it was paid 0.25 percent of the $65 million issuance or $162,500. Thus, in overseeing that bond creation and sale, Sabo & Deitsch netted $487,500.
That the Ashbys and Redmond had the ability to purchase $65 million in certificates of participation in the early- to mid-1980s controverted their claim and that of Ratelle that the Ten-Ninety Corporation was not able to defray a substantial percentage of the cost of the infrastructure and off-site improvements the Southridge project would require. It was subsequently detailed that the Ten-Ninety Corporation had been providing kickbacks to Ratelle, hiding and laundering those payments to him by putting money into a credit line the city manager had opened at the MGM Grand Hotel in Las Vegas.
Both Tim Sabo and Stephen Deitsch, the principals in Sabo & Deitsch, eventually became aware of the bribes being provided to Ratelle by the Ashbys and Redman, and the degree to which this brought the infrastructure cost defraying arrangement for the Southridge project into question. Neither Sabo nor Deitsch, however, called for a reappraisal of that arrangement nor for an investigation of Ratelle, the Ashbys and Red from Dennis Kottmeir, who left office in 1995, Dennis Stout, who left office in 2003 and Mike Ramos, who left office in 2019, pursued a criminal case against Ratelle, the Asby brothers or Redman, despite their office being possession of evidence indicating money originating with the Ten-Ninety Corporation had been provided to Ratelle.
The 32.23 acres of property, located near Live Oak Avenue and Village Drive, upon which KB Homes is to construct the 255 new homes is within the property originally intended for the Ten-Ninety Corporation’s original 9,100-unit subdivision, such that much, or indeed most or all of its infrastructure is already in place.
Nevertheless, City Accounting Supervisor Samuel Perez indicated that the future occupants of the 255 new homes will be called upon to pay an annual Mello Roos assessment of between $4,100 to $4,800, depending on the square footage of the home, with annual escalations of up to 2 percent per year. The Mello Roos assessment comes in addition to yearly property tax on the homes collected by the county, which is pegged at a maximum of 1.95% of the home’s value.
Perez, who was designated by current city management to chaperone the concept of creating the community facilities district on the new homes past the city council, through elliptical statements, indicated he had an understanding of the history surrounding the property and the way the city’s taxpayers generally and the longtime residents of Southridge had paid subsidized the Ten-Ninety Corporation’s graft ridden profiteering. The manner in which Perez explained and rationalized the imposition of the new community facilities district assessment suggested a consensus that new or incoming residents of Fontana would need to share in being fleeced by Ratelle, the Ashbys and Redman in the same way that those who had arrived in Fontana before them had been.
The city will issue $11 million in bonds to fund $9.2 million worth of infrastructure and establish the financing district, Perez said. Doing so, he said is “in alignment with the city’s discipline and forward-looking approach to managing growth in our community.” Thus, he said, “The proposed formation of CFD 117 is designed to ensure new development within the city funds the infrastructure and services it requires without shifting that burden onto existing residents or the city’s general fund.” Perez brushed past that the community had already paid $374.4 million to construct the Southridge infrastructure, that the diversion of the responsibility to pay for that infrastructure had been engineered through bribery of a previously top-positioned city official and that no effort to hold that official or those who had compromised him accountable.
In addition to the annual $4,100 to $4,800 Mello Roos assessment, homeowners will be called upon to pay $11,817 to $12,480 in yearly property tax on the homes – calculated at 1.95 percent of the value of the homes, which are to be marketed at between $606,000 and $640,000.
Councilman John Roberts is the longest-serving member of the Fontana City Council, having logged more than 35 years on the panel after having first been elected to that position in 1992. Prior to that, throughout the 1980s, Roberts was employed by the San Bernardino County Fire Department in the capacity of a firefighter and fire captain providing service to the City of Fontana at San Bernardino County Fire Station 71, located at 16980 Arrow Boulevard in Fontana, proximate to Fontana City Hall. While he was stationed out of Fire Station 71, he worked closely with another fire captain, Gary Boyles, who was a member of the Fontana City Council from 1984 until 1992 and Fontana mayor from 1992 to 1994. Through his association with Boyles, who was a member of the council majority that forced Ratelle to depart from Fontana in 1987, and closeness in general to governmental action in Fontana, Roberts was highly knowledgeable of the depredations Ratelle had engaged in while he was city manager. As the second-longest serving local elected official in San Bernardino County and the longest serving member of the Fontana City Council, Roberts embodies/possesses institutional memory with regard to the Southridge development debacle that is unparalleled.
At the April 14 meeting, at which council members Jesse Sandoval and Peter Garcia, perhaps intentionally, were not in attendance, following the presentation from Perez and the other members of city staff, Roberts inquired as to whether the formation of Community Facilities District 117 would affect areas of Southridge outside of KB Homes’ project area. Perez indicated it would not. Roberts, who seemed to be on the brink of exploring the aspects of the infrastructure provision history at Southridge, receded from exploring the topic more fully.
Roberts then joined Mayor Acquanetta Warren and Councilman Phil Cothran Jr in ratifying the creation of the community facilities district.